Internal and External Sources of Finance

What is the most secure source of finance for a business?

• Selling shares

• Bank overdrafts

• Trade credit

• Venture capital

Why is it wise to obtain at least 25% more finance than seems necessary for a business?

• To invest in risky ventures

• To cover unexpected problems

• To pay higher dividends

• To attract more investors

What type of finance is suitable for a business wanting to buy a ten-year lease on a shop?

• Venture capital

• Bank overdraft

• Long-term finance

• Short-term finance

What is the key benefit of share capital for a business?

• No dilution of ownership

• Guaranteed dividend payments

• Permanent capital for the business

• Low interest charges

Explain the main drawback to businesses of share capital?

What is the key feature of loan capital?

• No risk of asset repossession

• Variable interest charges

• No interest payments

• No fixed repayment terms

What is venture capital a combination of?

• Crowdfunding and personal savings

• Bank overdraft and retained profit

• Share capital and loan capital

• Loan capital and trade credit

What is the ideal source of capital for business expansion?

• Bank overdraft

• Retained profit

• Crowdfunding

• Venture capital

What is crowdfunding a mixture of?

• Personal savings and venture capital

• Trade credit and bank loan

• Loan capital and share capital

• Financing and market research

What is the main advantage of crowdfunding for business start-ups?

• Market research opportunity

• Low interest charges

• High success rate

• Guaranteed funding